Vanguard Roth IRA: Is It the Best Roth for You?
With a Vanguard Roth IRA you’ll find some of the lowest-cost mutual funds around. But Vanguard’s mutual fund minimums are a disadvantage.
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Roth IRAs are a popular retirement savings account, and Vanguard is big with retirement savers thanks to its low costs and wide selection of funds.
There’s a lot to love about a Vanguard Roth IRA, but it won’t necessarily fit everyone’s situation. Here's what you ought to know before you decide.
If you're looking to invest for retirement primarily through ETFs or mutual funds, Vanguard's Roth IRA could be a great option for you. The broker specializes in retirement investing and has lots of educational materials and retirement planning tools. Unfortunately, if you're trying to invest in a wider variety of assets or get an IRA match, you'll need to look elsewhere. Also, Vanguard's fund minimums are pretty high compared to other brokers.
Wide variety of funds
Access to stocks, ETFs and options
Great educational resources
No IRA match
Steep fund minimums
App is not excellent
» Want to compare options? See our picks for the best Roth IRA accounts
1. Is a Roth IRA right for you?
A Roth IRA offers many advantages. While you don’t get an immediate tax break, all your money, including investment earnings, comes out tax-free in retirement.
That’s a sweet deal. But if you would rather not wait for your tax break, you could save for retirement in a traditional IRA, which could mean a tax break every year you contribute. Here’s more on how to choose between a Roth IRA vs. a traditional IRA.
2. Is a Vanguard Roth IRA right for you?
So, you’ve decided the Roth is for you. The next question is: Is Vanguard the best provider for you?
What's good about a Vanguard Roth IRA?
Low costs
Fees can make or break your long-term savings. Vanguard offers very inexpensive mutual funds, which makes it a popular option for many retirement savers. As of 2024, Vanguard's average ETF and mutual fund expense ratio was 0.07%.
Wide selection of funds
You can build a successful investment portfolio from a handful of mutual funds or ETFs (for ideas, check out these simple portfolio strategies), but Vanguard makes it easy to find just the right combination of funds.
The company offers more than 3,600 no-transaction-fee mutual funds. All of the exchange-traded funds (ETFs) on its platform are offered commission-free.
Still, commission-free ETFs are the norm these days at most brokers, and other brokers have an even higher number of no-transaction-fee mutual funds, so it might make sense to shop around.
What's not as good about a Vanguard Roth IRA
Fund minimums
A barrier to entry for some would-be retirement savers is having enough saved up to open an account: Many brokers don’t impose account minimums but mutual funds sometimes have their own investment minimums.
Most Vanguard mutual funds require a minimum investment of $1,000 to $3,000. (Exchange-traded funds from Vanguard or other providers generally don’t have investment minimums.)
There are many mutual funds available at other brokers that have no minimums or lower minimums.
No IRA match
Other brokers, such as Robinhood and SoFi, offer an IRA match on contributions. The matching percentage varies, but it does mean free money for contributing to your retirement savings. Unfortunately, Vanguard does not offer an IRA match.
3. What are your other options?
In addition to Vanguard, you can open a Roth IRA with another online broker or a robo-advisor.
Brokers
An online broker lets you choose your own investments. This tends to be one of the lowest-cost options:
There’s no management fee like you’ll pay with a robo-advisor.
You’ll pay an expense ratio for any mutual funds you buy — but you’ll also have to pay those with a robo-advisor.
Robo-advisors
Like a broker, a robo-advisor will give you access to stock and bond investments. With a robo-advisor, you pay a fee so that the advisor picks and manages investments on your behalf. If you like the idea of letting someone else manage your retirement savings, a robo-advisor may make sense. (Vanguard has a robo-advisor, called Vanguard Digital Advisor.)
